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Gavin Newsom, part 2: Wine, homelessness and the gig economy

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Part 2

SH: Let’s move on to wine. Thoughts in general on the California wine industry.

GN: I mean, it’s not like Donald Trump, “Let’s make America great again,” because it’s already great. We keep raising the bar. The drought’s been the big question mark, what is the drought going to mean, in the medium and long term, for the wine industry and California. Of course, even though America is so Napa-centric, we’re conscious, more broadly, in the wine industry, that clearly that doesn’t paint a picture of the California wine industry that’s been impacted in other parts of the state significantly…

SH: What is your involvement in your wineries?

GN: You know, I don’t get involved day-to-day in the micro-management. It’s more broad strokes, strategic and big decisions. By definition, I’ll sign off as the general partner.

SH: A big conversation among the wine pundits is alcohol level.

GN: [laughs] It’s getting too high, or it’s always been high.

SH: Any thoughts?

GN: Well, it’s funny, it comes up a lot, doesn’t it? Yeah, you skate to where the puck’s going, I guess. People like that unctuous, fat and sweet—

SH: Do you?

GN: I love California wines, so it’s interesting, it’s sort of like the frog, the water’s getting warm. My time in the industry has been the last 15, 20 years, where we’ve seen the dial go up, and it’s weird to go back and find an old Louis Martini from the Seventies, and you look at it, it’s 10.5%, 10.8%. It’s weird. So I think there’s a lot of fudging with those numbers, as well. They’ve been higher

SH: So you’re not especially concerned with higher alcohol?

GN: I mean, PlumpJack are big wines. These are big, in-your-face, smash-mouth wines, in terms of that ripeness, and there’s a drinkability to that in the short run which I think people like. The vast majority of these wines are consumed young.

Gavin1

SH: Now that you mention it, you and Gordon [Getty] and your team made that big step years ago of putting 50 percent of PlumpJack production under screwtops. Are you still doing it?

GN: Yes. Interesting; let me interject. We had partnered with U.C. Davis on a ten-year study that they just published a month ago.

SH: On the ageability?

GN: Yeah. So they used our wines, and some other wines, and they just came out with a report.

SH: Can you summarize it?

GN: I am getting a copy myself. But I got a summary from my winemaker, and from our GM, and it was conclusively inconclusive, meaning it’s a classic study, like the fracking study that came out recently, where the oil industry said “Great study” and the environmentalists also said “Great study.” You found what you were looking for.

SH: Have you tasted older vintages [of PlumpJack Cabernet]?

GN: Yeah, so many of these double-blind wine tastings, and all these experts all around us, and they’re absolutely convinced this one’s a screwcap and this one’s a cork. Without exception, the one consistent thing was the inconsistency. The outcome is challenged by the variability in the bottles that confounds you when you say “Screwtop’s not going to allow you any oxygen, or less oxygen, than the cork, so this is not going to age well,” and then you find out, when you taste it, the exact opposite.

SH: Are you surprised that more Napa Cabernet houses have not gone to screwcap?

GN: I’m surprised by how many have.

SH: On the high-end Cabernets?

GN: It’s not on the high end, but more broadly, we’ve seen it more and more acceptable. We know, because we’re seeing it, there’s a very famous First Growth Bordeaux [Ed: Margaux] that’s done screwcaps for their own internal investigation. So that suggests there’s a growing consciousness.

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SH: What do you think of prices? Jon Bonne, in the Chronicle, recently suggested that Napa is getting out of control.

GN: I’m with you. When we started PlumpJack, we were pricing our Reserves substantially less than, say, Groth Reserve, or certainly Opus One, Silver Oak, or some of our neighbors: Screaming Eagle’s across the street. But we were way below, and people literally said, “What’s wrong with the wine?” So we had to adjust the price, just to be competitive. It was an interesting problem: we underpriced it, so people underappreciated it as a consequence, so we raised the price. I was dubious and nervous about that, but it was interesting; I got blowback from folks. But even now, I’ll tell you, there’s two minds on this. You look at Napa, and at our price points compared to other price points [e.g. Bordeaux], we’re pretty reasonable. So in some ways you can say they’re incredibly modest…

SH: Do you think—

GN: I think some things are wildly overpriced!

SH: I always wonder how all these triple-digit Napa Cabernets stay in business. There’s hundreds of them.

GN: I know.

SH: You know these people. How do they stay in business?

GN: Because it’s a globalized market. I went out and saw first-hand, in China, in Shanghai, in Beijing, in Hong Kong, I was there for PlumpJack and CADE and, soon, Odette, and the fact is, our market reach has expanded significantly. We’ll selling all around the world. The reality is, we’re selling out of everything, every year.

SH: Mazel tov.

GN: It is wonderful. And frankly, for us, it’s a question of how you allocate, particularly retail versus restaurants, and how you allocate your overseas. I’m thinking of those 2011s, a tougher vintage, but people loved it anyway. So it was a counter to your earlier point: it was a little more French.

SH: Lower alcohol. There were some beautiful ‘11s. There were some gorgeous mountain Cabs. I think there were more problems as you went out towards the Coast. Some Pinots and Chards were moldy or veggie. Well, let’s move on to the conversation about San Francisco, and real estate and housing. I know people in Oakland who have been pushed out. What do you think about the current situation?

GN: I think about it all the time. I remember being a supervisor at the time, in the late 1990s, and we were struggling, not dissimilarly, with success. And a lot of arts organizations were victims of success. A lot of residents were victims of success, with evictions. So this is in many ways a replay, a golden oldie. But for those impacted by it directly, it’s devastating. And it’s now impacting not just on the residential side, but commercial establishments that are doing extraordinarily well, but cannot afford the renewals on their leases. They’ve weathered earthquakes, recessions, but cannot weather this climate of success.

SH: Care Not Cash [Mayor Newsom’s homeless policy] in retrospect didn’t really work—

GN: It was a phenomenal success!

SH: What happened?

GN: They rested on their laurels. Care Not Cash is only as good as its application and implementation. We saw a 30%, almost 33% decline almost overnight in the homeless population. But that was ten years ago! I haven’t been Mayor for six damned years. This is getting worse and worse, and it’s tipped in the opposite direction, and I have a lot of strong opinions on it. I don’t want to be critical, but the outrage is understandable right now in San Francisco.

SH: [San Francisco Mayor Ed] Lee is coming up against a big backlash. How’s he doing?

GN: I think it’s difficult. Look, when I was Mayor we had the highest minimum wage in the U.S., the only paid sick leave, the only universal healthcare, including for undocumented residents, universal pre-school and after-school…these are not assertions, these are things that were fully implemented and exist in the city. These are usually the quivers you pull out in this environment, in order to soften the blow of success…but it’s still inadequate.

SH: Ultimately, you can’t put a brake—

GN: On the macro.

SH: On the macro.

GN: It’s a supply and demand problem, which goes back to, What’s the right price to sell your wine? Well, that’s determined by the market.

SH: You’re not in this to be the good guy.

GN: It’s a business. If you focus on excellence, it usually is rewarded. And by the way, San Francisco’s long been focused on excellence, but the downside is there’s a spread issue, and the income gap here, the Great Gatsby curve, is so acute here, it’s devastating. So you continue to do what you can to address that—I’ll tell you, I think about this a lot, I talk to the Mayor’s office a lot, comparing notes, what the hell more can you do, without a command-and-control approach to suppressing the macro economic growth.

SH: Would you have been in favor of the building moratorium in the Mission?

GN: No. The idea that you stop construction and somehow that aids affordability, in a market environment, where less supply only increases costs when the demand is so high? I’m at a loss to understand that, except that that was brought up when Willie Brown was Mayor, it was brought up when I was Mayor, rejected both times. It doesn’t surprise me that it was brought up again.

SH: When I moved to the City, after the [Moscone and Milk] assassinations, in the Seventies, when Feinstein became Mayor, exactly the same conversation was going on, thirty-something years ago.

GN: Again, the price of success. But there’s something else going on here: we’re at a hinge point in history, as the old economy is giving way to the new economy, and the industrial economy’s run out of gas. It’s an atrophy, and you’re seeing the contours of the formation of something radically different, these participation platforms, these contribution platforms, this on-demand work that exists with the shared economy.

SH: So thoughts on the gig economy, you brought it up. Is it a good thing?

GN: Well, the tech genie’s out of the bottle. And you can’t put it back in. So everything is reorganizing itself. We can lament about it, or we can organize a strategy to allow people to prosper and succeed in this environment. And on-demand work requires on-demand education, and a different mindset in terms of education, of K-12 education but also lifelong learning. It requires us to think differently about our rules and regulations…Right now we’re paving over the old cow path by offering solutions that frankly are inadequate to the challenge. And I repeat: the solutions we’ve offered in San Francisco that I promoted as Mayor, that this Mayor is promoting, are inadequate: higher minimum wage is inadequate. Paid sick leave is inadequate. Universal this, universal that is inadequate. Necessary, but hardly sufficient to deal with something that is so acute and so radically different in terms of a new distribution of wealth that now is concentrated in this technologically enhanced economic environment.

GavSmile

SH: The poster child for the gig economy is Uber [which recently announced it’s opening a huge office center in downtown Oakland]. Should their drivers be offered benefits and sick leave? The drivers themselves seem to be saying, Hey, we’re happy to be able to work when we want.

GN: Yeah, but I mean, drivers are—look, the bottom line is Uber is successful for one reason: excellence. They provide an exponentially better service than the old industrial taxicab industry, which I am not [just] familiar with, I am intimately familiar with, having chaired a task force twenty years ago, trying to manage it as Mayor, fighting to get more cabs, fighting to get them to pick up folks in low income communities, to get a centralized dispatch center, and the industry fought all those things. So invariably, a guy named Travis [Kalanik] comes along with an app to fill the void, and to create a competitive environment, and the taxicab industry was slow to adapt. Do I feel badly for these medallion holders? Of course. They’ve been on the wait list for decades. Do I feel badly for the poor guy who’s working his tail off in an old industry? I do. But the reality is, change and disruption are for real. And so, either adapt to this environment in real time, or you’re going to get run over literally and figuratively. And I get it—I’m not a techno-utopian, but the fact is, we have to wake up to this reality. Airbnb is the largest accommodation company in the world and it has no real estate. Uber is the largest taxicab company in the world and it has no taxicabs. You start thinking about these things, and something big is happening in real time that requires radically different thinking from a public policy perspective.

SH: Why is it that so many liberals get so upset at Uber?

GN: Because we are so used to a world that—[sighs] I think we’re just, we’re stuck on this romantic notion of security that served us well for 150 years, but it’s a world that no longer exists. And so we hold on to this past, which I understand: You work hard, play by the rules, and get ahead. That used to be the paradigm we were born into. But it’s not necessarily—

SH: It still is: You work hard, and get ahead.

GN: Not for everyone anymore, and that’s the challenge, from a public policy perspective. People are working their tails off, they’re not getting ahead, they’re stuck behind. So how do you deal with retirement in a 401(K) world where it’s now defined contributions, not defined benefits? How do you deal in an environment where competition is two billion people living overseas, not just two hundred folks who are living next door? So, again, something big is happening with the merger of IT ad globalization. It means we’ve got to step up our game and it requires a different way of thinking. I’d love the 9-to-5 days, the gold watch, strong retirement, I would love that, but…

Next: Newsom on gay rights, working in an incubator, social media, staying in shape, the upcoming Governor’s race in California, and the Republican and Democratic contests for President.

  1. Bill Haydon says:

    “Of course, even though America is so Napa-centric”

    Another laughably out of touch politician!

    And seriously screw Uber. It is one of the most evil corporations on the planet. They’re successful for one reason only, and that is that Wall Street has pumped billions of dollars into this experiment, but let’s see what happens when the orders come down to finally start turning a profit. As for Uber’s business practices, there are very solid reasons why they’ve been banned in many European countries.

    Newsom is just another Rockefeller Democrat. A generation ago, he’d have been a liberal Republican.

  2. @Bill – I rarely take a Taxi as it always feels so over priced. But, Uber disturbs me, too. The business model appears to be all about extracting as much as possible from the little guy, the driver. The result is probably just more inequality.

  3. Bill Haydon says:

    @Brad;

    It’s funny. I was just talking to a guy in a wine shop in Chicago who had driven for Uber. He said that he averaged about $11/hour before gas, wear & tear on the car and insurance. Essentially, he was making less than minimum wage with no benefits and had to pay his own payroll taxes because of the independent contractor status.

    It’s a really parasitic business model, and given Uber’s long list of transgressions already, one can only imagine what happens to these drivers (and the cheap fares) after the competition is out of the way and Uber’s model shifts to making a profit. No thanks. That’s a form of excellence that I choose not to support.

  4. Let’s face it. The Uber model is really overdue. Not because Uber is some wonderfully run charity but because the taxi business is its own brand of scam. Ever try to get a taxi in San Francisco at rush hour? No chance because there are nowhere near enough permits as the cabbies themselves work like crazy to restrict the supply.

    I just spent two weeks in England. Took “black cabs” everywhere. They are plentiful and the drivers are incredibly knowledgeable because the rules says that they must be.

    But Uber has big inroads because it can be called via smart phone app and is predictable.

    This is a wine board, not a taxi board, but this conversation has turned “political” and misses the big point. Uber succeeds because of the shortcomings with the existing model. Uber is not shut down in Europe although some parts of it have been curtailed essentially because of pressure from the existing taxi lobby, not because the drivers were getting screwed.

    Oh, and I do not use Uber in general because some of their pricing is predatory and unpredictable.

  5. I agree with Charlie, except for the part about not using Uber.

    While I’m amazed at how Uber has been able to get away with a business model that appears to violate various laws and regulations, I have no sympathy for the taxi industry. From a customer service standpoint, they’ve been consistently awful: poorly maintained vehicles, drivers who don’t know the city, slowness to adapt to technology (I still see many cabs without GPS systems), refusal to take credit cards (amazing how often the card reader is “broken”), drivers who yammer on their phones the entire time and/or drive like maniacs.

    It’s similar to how I felt about “file-sharing” services like Napster back when they were “disrupting” the record industry — it’s hard to defend what the upstart is doing legally, but man, if there was ever an industry that it coming….

  6. Matt Mauldin says:

    “But even now, I’ll tell you, there’s two minds on this. You look at Napa, and at our price points compared to other price points [e.g. Bordeaux], we’re pretty reasonable. So in some ways you can say they’re incredibly modest…”

    That’s getting to be a tougher argument to make for Napa. Outside of First Growths and the classic Right Banks, there’s a ton of high-quality Bordeaux (classified growths included) that’s more reasonably priced than their Napa counterparts. If you read Napa Cab reviews in wine mags and websites, and count the number of them priced above $150… it’s nuts.

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